Africa PE, PP pricing “a battlefield” – sources

10 April 2013 16:52[Source: ICIS news]

LONDON (ICIS)--Pricing in the African polyethylene (PE) and polypropylene (PP) markets is fraught with tension, sources said on Wednesday, with pressure on producers to lower their offer prices vying with a desire to safeguard margins, and strong competition between sellers.

“There’s some demand, but pricing is a battlefield,” a producer said. “Everyone is pushing to have an order. Everyone wants to sell.”

“There’s high competition from [another producer],” a second producer said.

A recent softening of PE and PP prices in China led to many Middle Eastern and African producers lowering their April offers, as African buyers held back.

However, with some producers having recently returned from maintenance, and with stocks said to be at a comfortable level, price decreases may not have been as significant as purchasers hoped for.

In contrast, other producers are said to hold plentiful inventories, and may feel a greater need to offload material.

Further recent price decreases in the Chinese PP market, and an uncertain outlook for both the PE and PP markets there, continue to impact the African market.

African buyers are believed to again be refraining from purchasing, with the hope that prices will decrease further.

“[They’re] speculating about May [offer prices] already,” the first producer said. “They [prices] will not go up. Market sentiment is that it [prices] will go down. There are minimum orders. Buyers are holding back again.”

The source added that the African markets have been bearish since the beginning of the year, and that end markets are weak. The negative influence of the eurozone crisisis has spread, the producersaid: “What's happening in Europe is having an impact on emerging markets.”

A third producer said: “Buyers are still sceptical and hopeful of further price reductions. Thye’re on the sidelines, despite depleting their inventories.”

Meanwhile, the second producer takes a more optimistic view: “China [prices] will not go down more. Demand is moving up in Africa, May should be better than April.”

With many participants attending the Gulf Petrochemicals and Chemicals Association (GPCA) Plastics conference in Dubai this week, a clearerpicture of pricing is expected to emerge next week when they have returned to their desks.